UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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HERMÉS OF PARIS, INC.,
Petitioner,
- against -
MATTHEW SWAIN,
Respondent.
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Case No.:
ECF Case
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MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF’S PETITION TO COMPEL
ARBITRATION AND TO ENJOIN PENDING STATE COURT ACTION
Lawrence R. Sandak, Esq.
Edna D. Guerrasio, Esq.
PROSKAUER ROSE LLP
One Newark Center 18th Floor
Newark, New Jersey 07102
(973) 274-3200
Attorneys for Plaintiff Hermés of Paris, Inc.
Case 1:16-cv-06255-CM Document 5 Filed 08/05/16 Page 1 of 17
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TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ............................................................................................................ii
PRELIMINARY STATEMENT .......................................................................................................1
RELEVANT HISTORY ....................................................................................................................2
ARGUMENT ....................................................................................................................................5
I. FEDERAL LAW REQUIRES THAT THE PARTIES’ ARBITRATION
AGREEMENT BE ENFORCED ...........................................................................................5
II. THIS COURT IS THE PROPER FORUM FOR COMPELLING
ARBITRATION ....................................................................................................................5
III. THE COURT SHOULD COMPEL ARBITRATION ...........................................................6
A. There is an Agreement to Arbitrate Between Swain and Hermés .....................................7
B. The Scope of the Agreement to Arbitrate Includes the Claims
Identified in the State Court Complaint ............................................................................8
IV. THIS COURT SHOULD ENJOIN THE PENDING STATE COURT
ACTION ................................................................................................................................9
CONCLUSION ................................................................................................................................ 12
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TABLE OF AUTHORITIES
Page(s)
CASES
Aerotel, Ltd. v. RSL Commc’ns, Ltd.,
99 F. Supp. 2d 368 (S.D.N.Y. 2000) ......................................................................................5, 8
Arakawa v. Japan Network Grp.,
56 F. Supp. 2d 349 (S.D.N.Y. 1999) ..........................................................................................7
Arthur Andersen LLP v. Carlisle,
556 U.S. 624 (2009) ...................................................................................................................8
AT&T Mobility LLC v. Concepcion,
563 U.S. 333 (2011) ...................................................................................................................9
AT&T Techs., Inc., v. Commc’ns Workers of Am.,
475 U.S. 643 (1986) ...................................................................................................................5
Cap Gemini Ernst & Young U.S. LLC v. Arentowicz,
No. 04 Civ. 0299 (DAB), 2004 U.S. Dist. LEXIS 11337
(S.D.N.Y. June 22, 2004) ...........................................................................................................7
Cap Gemini Ernst & Young, U.S., LLC v. Nackel,
346 F.3d 360 (2d Cir. 2003).......................................................................................................7
Citigroup Global Mkts., Inc. v. VCG Special Opportunities
Master Fund, Ltd.,
598 F.3d 30 (2d Cir. 2010).......................................................................................................11
Collins & Aikman Prods. Co. v. Bldg. Sys.,
58 F. 3d 16 (2d Cir. 1995)..........................................................................................................8
Dean Witter Reynolds, Inc. v. Byrd,
470 U.S. 213 (1985) ...................................................................................................................5
Farr & Co. v. Cia. Intercontinental De Navegacion De Cuba,
243 F.2d 342 (2d Cir. 1957).......................................................................................................6
Genesco, Inc. v. T.Kakiuchi & Co.,
815 F.2d 840 (2d Cir. 1987).......................................................................................................7
Great W. Mortg. Corp. v. Peacock,
110 F.3d 222 (3d Cir. 1997).......................................................................................................7
Case 1:16-cv-06255-CM Document 5 Filed 08/05/16 Page 3 of 17
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Greenlight Capital, L.P. v. Apple, Inc.,
No. 13 Civ. 900 (RJS), 2013 WL 646547 (S.D.N.Y. Feb. 22, 2013) ......................................11
Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd.,
230 F.3d 549 (2d Cir. 2000).......................................................................................................7
In re Burger Chef Sys. Inc. v. Baldwin Inc.,
365 F. Supp. 1229 (S.D.N.Y. 1973) .........................................................................................10
In re Necchi Sewing Mach. Sales Corp. v. Carl,
260 F. Supp. 665 (S.D.N.Y. 1966)...........................................................................................10
In re Petition of the Home Ins. Co.,
908 F. Supp. 180 (S.D.N.Y. 1995).............................................................................................6
Int’l Fashion Prods., B.V. v. Calvin Klein, Inc.,
No. 95 Civ. 0982 (JFK), 1995 WL 92321 (S.D.N.Y. March 7, 1995) ....................................11
JP Morgan Secs. v. La. Citizens Prop. Ins.,
712 F. Supp. 2d 70 (S.D.N.Y. 2010) ..........................................................................................6
Kamerling v. Massanari,
295 F.3d 206 (2d Cir. 2002).....................................................................................................11
Lloyd v. Hovensa,
369 F.3d 263 (3d Cir. 2004).......................................................................................................9
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1 (1983) .......................................................................................................................5
Oil Basins Ltd. v. Broker Hill Proprietary Co. Ltd.,
613 F. Supp. 483 (S.D.N.Y. 1985).............................................................................................6
Paramedics Electromedicina Comercial LTDA v.
GE Med. Sys. Info. Techs., Inc.,
No. 02 Civ. 9369 (DFE), 2003 WL 23641529 (S.D.N.Y. June 4, 2003).................................11
Pervel Indus., Inc. v. TM Wallcovering, Inc.,
675 F. Supp. 867 (S.D.N.Y. 1987), aff’d, 871 F.2d 7 (2d Cir. 1989) ......................................10
Reliance Nat’l Ins. Co. v. Seismic Risk Ins. Servs., Inc.,
962 F. Supp. 385 (S.D.N.Y. 1997).....................................................................................10, 11
WeWork Companies Inc. v. Zoumer,
No. 16 Civ. 457, 2016 WL 1337280 (S.D.N.Y. Apr. 5, 2016) ..................................................6
Wright v. SFX Entm’t, Inc.,
No. 00 Civ. 5354 (SAS), 2001 WL 103433 (S.D.N.Y. Feb. 7, 2001) .......................................7
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STATUTES
9 U.S.C. § 3 ..................................................................................................................................5, 9
9 U.S.C. § 4 ..............................................................................................................................1, 5, 6
28 U.S.C. § 2283 .............................................................................................................. 1-2, 10, 12
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PRELIMINARY STATEMENT
Shortly after his hire by Petitioner Hermés of Paris, Inc. (“Petitioner” or “Hermés”),
Respondent Matthew Swain (“Swain”) entered into an arbitration agreement with Hermés,
requiring him to arbitrate, before a mutually selected arbitrator from the American Arbitration
Association (“AAA”), any and all disputes relating to or arising out of his employment with
Hermés, including statutory discrimination claims. Swain expressly agreed that arbitration
before the AAA would be the “sole, exclusive, and final forum for any remedy” in the event a
dispute could not be resolved through informal discussion or voluntary mediation. He expressly
acknowledged that he was waiving any right he may have to have his dispute heard in a court or
resolved by a jury. The agreement includes a forum selection provision establishing New York
City as the exclusive site of the AAA arbitration and a New York choice of law provision.
In flagrant disregard of his promise to resolve disputes with Hermés through a dispute
resolution procedure, and to arbitrate any unresolved claims before the AAA in New York City,
Swain commenced an action in New Jersey Superior Court, asserting statutory discrimination
and contract-based claims against Hermés that fall squarely within the scope of the agreement to
arbitrate that he signed. Swain, through his counsel, does not deny that he signed the dispute
resolution agreement with Hermés; rather Swain’s counsel baldly asserts that “Swain never
agreed to any alternate dispute resolution of his LAD [New Jersey Law Against Discrimination]
claims” and that “[t]he NJ [New Jersey] Superior Court is where his LAD claims will be decided
pursuant to his constitutional right to a jury trial.” Swain’s position is more than an inexcusable
attempt to renege on a promise. It is a violation of federal law. Hermés hereby petitions this
Court, under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 4, and the Anti-Injunction Act, 28
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U.S.C. § 2283, to compel the arbitration of Swain’s claims before the AAA in New York and to
enjoin his pending New Jersey state court action.
RELEVANT HISTORY
On August 28, 2015, Swain, an employee of Hermés, entered into an agreement with
Petitioner to arbitrate any and all disputes arising out of his employment, with several limited
exceptions not relevant here. (Ex. B.1) The standalone agreement, which is 5 pages in length and
titled, “Dispute Resolution Procedure” (the “DRP Agreement”), provides for a three-step dispute
resolution process: employees may first have “internal discussions” with their supervisors or
Human Resources; if the dispute is not thereby resolved, either party may initiate voluntary
mediation before the AAA at Petitioner’s expense; a dispute not resolved through mediation is to
be resolved through “final and binding arbitration” before “a single arbitrator” who is to be
“jointly select[ed] from the AAA arbitrator panel.” (Id., pp. 1-2.) Such an arbitration is to be
“held in [the] City, State and County of New York,” under the “AAA Employment Arbitration
Rules” at Petitioner’s expense. (Id., p. 2.) The DRP Agreement specifies that the parties will
arbitrate the following types of claims:
all legal and equitable claims, demands, and controversies, of
whatever nature or kind, whether in contract, tort, under statute or
regulation, or some other law, between you and [Hermés] … and
its employees … arising out of or related to: (i) the terms and
conditions of your employment with, or separation from [Hermés]
… ; (ii) any agreements (written or oral) now in existence or that
may come into existence in the future between you and [Hermés]
…; (v) claims arising from or related to alleged discrimination,
harassment, or retaliation in employment (including, but not
limited to, race, sex, sexual orientation, religion, national origin,
age, marital status, physical or mental disability or handicap, or
medical condition) under any federal, state and/or other
governmental law, statue, regulation, and/or ordinance…; (vi) any
1 All Exhibits referenced herein are attached to the Declaration of Lawrence R. Sandak, dated August 5, 2016,
submitted herewith and incorporated herein by reference.
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claims relating to leaves of absence, benefits, or compensation or
post-termination benefits under federal, state and local laws…
(Id., p. 5.) The DRP Agreement further states that:
By signing below, you agree (i) to mediate; and (ii) to arbitrate,
with arbitration being the sole, exclusive and final forum for any
remedy. You acknowledge you are waiving any right you may
have to a court or jury trial. … Your signature below indicates
your understanding and acceptance of this Dispute Resolution
Procedure. … Either you or [Hermés] may file a request with a
court for injunctive relief to enforce this Dispute Resolution
Procedure. New York law shall apply to this agreement.
(Id., pp. 2-3.)
Swain worked at Hermés between July 31, 2015 and November 6, 2015, at which time
his employment was terminated. (Petition ¶¶ 15, 17.) Eight months after his termination, Swain
sent Hermés a draft complaint, threatening litigation for alleged violations of the New Jersey
Law Against Discrimination (“NJLAD”). (Ex. C.) Hermés responded to Swain by providing a
copy of the DRP Agreement to his attorney and reminding him that the parties were obligated to
resolve any employment-related disputes through the dispute resolution process that includes
voluntary submission to mediation, followed by binding arbitration, in accordance with the DRP
Agreement. (Id.) On July 18, 2016, counsel for the parties discussed their mutual desire to
attempt to resolve Swain’s claims through mediation and Hermés therefore notified Swain that it
intended to commence AAA mediation under the terms of the Dispute Resolution Procedure
(“DRP”), as outlined in the DRP Agreement. (Exs C, E.) On July 19, 2016, Hermés took steps to
initiate mediation with the AAA, in accordance with the DRP Agreement, by mailing a
mediation submission form to the AAA. (Ex. E.)
On that same day, July 19, 2016, in utter disregard of the DRP Agreement, Swain filed a
complaint in the Superior Court of New Jersey, Essex County, Docket No.: L4996-16, against
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Hermés and a Hermés employee, Lorenzo Bautista, as well as unidentified corporate entities and
individuals, alleging claims of discrimination, hostile work environment, retaliation, individual
supervisor liability and breach of contract, all arising from Swain’s employment.2 (Ex. A.)
Swain’s counsel notified Hermés of the filing in an e-mail, in which he cavalierly dismissed his
client’s obligations under the DRP stating that Swain “never agreed to any alternate dispute
resolution of his LAD claims.” (Ex. C.) Despite the crystal clear waiver of his right to a jury
trial and the broad scope of the DRP Agreement’s coverage, including claims of discrimination
under any federal or state law, Swain’s counsel also informed Hermés that the DRP Agreement
“makes no mention of anti-discrimination laws” and insisted that “[t]he NJ Superior Court is
where his LAD claims will be decided pursuant to his constitutional right to a jury trial.” (Id.)
A week later, on July 26, 2016, a representative from the AAA sent the parties the initial
mediation information packet. (Ex. D.) Swain’s attorney responded, “absent a court order to the
contrary, we are not a party to this purported mediation.” (Id.) Hermés confirmed its interest in
proceeding with the mediation, under the DRP, and took steps to preserve the possibility of
mediation. (Id.) However, Swain’s refusal to participate in mediation under the DRP, and his
express waiver of his right to mediate under the DRP, has triggered the arbitration stage of the
DRP.
2 The complaint alleges that during Swain’s 90-day employment with Hermés, Swain was subjected to a hostile
work environment and received less favorable treatment than other employees because of his sexual orientation.
Swain further alleges that when he objected to the alleged discriminatory behavior, Hermés retaliated against him
and ultimately terminated his employment, which forced him to forfeit a signing bonus. The complaint pleads four
causes of action under the NJLAD, N.J.S.A. 10:5-1 – 49, and one common law cause of action for breach of
contract. Hermés and Bautista were served on August 4, 2016.
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ARGUMENT
I. FEDERAL LAW REQUIRES THAT THE PARTIES’ ARBITRATION
AGREEMENT BE ENFORCED
“Federal law and policy strongly favor arbitration as a means of alternative dispute
resolution.” Aerotel, Ltd. v. RSL Commc’ns, Ltd., 99 F. Supp. 2d 368, 372 (S.D.N.Y. 2000). See
also Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). The
FAA specifically declares that arbitration agreements are “valid, irrevocable, and enforceable”
and “[b]y its terms … leaves no place for the exercise of discretion by a district court, but instead
mandates that district courts shall direct the parties to proceed to arbitration on issues as to which
an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213,
218 (1985) (emphasis in original); 9 U.S.C. §§ 3, 4. Thus a court must compel “arbitration
unless it may be said with positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute.” AT&T Techs., Inc., v. Commc’ns Workers of
Am., 475 U.S. 643, 653 (1986) (citation omitted).
The parties’ arbitration agreement, as described above, falls squarely within the types of
agreements promoted and protected by the FAA. As a matter of policy and contract, this Court
must enforce its provisions.
II. THIS COURT IS THE PROPER FORUM FOR COMPELLING ARBITRATION
Section 4 of the FAA provides that a “party aggrieved by the alleged failure, neglect or
refusal of another to arbitrate under a written agreement for arbitration may petition any United
States district court which, save for such agreement, would have jurisdiction under title 28… for
an order directing that such arbitration proceed in the manner provided for in such agreement.” 9
U.S.C. § 4.
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It is a “well-established principle that only the district court in the district where the
arbitration will proceed may order arbitration.” In re Petition of the Home Ins. Co., 908 F. Supp.
180, 182 (S.D.N.Y. 1995). This is because “under the Arbitration Act, arbitration must proceed
in the district where the order directing arbitration is filed, see 9 U.S.C. § 4, and a federal district
court may only compel arbitration in its own district.” Id.3 See Oil Basins Ltd. v. Broker Hill
Proprietary Co. Ltd., 613 F. Supp. 483, 486 (S.D.N.Y. 1985) (“[t]he Federal Arbitration Act
makes it clear that … a federal district court may only compel arbitration in its own district”).
Thus, the proper forum for a motion to compel arbitration is the district wherein the arbitration is
to proceed in accordance with the parties’ agreement. Farr & Co. v. Cia. Intercontinental De
Navegacion De Cuba, 243 F.2d 342, 346 (2d Cir. 1957); WeWork Companies Inc. v. Zoumer,
No. 16 Civ. 457, 2016 WL 1337280, at *2 (S.D.N.Y. Apr. 5, 2016); JP Morgan Secs. v. La.
Citizens Prop. Ins., 712 F. Supp. 2d 70, 81-82 (S.D.N.Y. 2010).
Since the DRP Agreement provides expressly for arbitration in the City of New York,
and only this Court may compel arbitration in the City of New York under the FAA, this Court –
and not any other court – is the correct forum for determining whether arbitration should be
compelled.
III. THE COURT SHOULD COMPEL ARBITRATION
A party aggrieved by the refusal of another party to arbitrate under an arbitration
agreement may petition a United States District Court for an order directing that such arbitration
proceed in a manner consistent with the agreement. See 9 U.S.C. § 4. Under this principle,
courts routinely compel arbitration pursuant to an arbitration agreement, even when the opposing
3 9 U.S.C. § 4 provides that, “upon being satisfied that the making of the agreement for arbitration or the failure to
comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in
accordance with the terms of the agreement. The hearing and proceedings, under such agreement, shall be within the
district in which the petition for an order directing such arbitration is filed.”
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party has attempted to avoid arbitration by initiating a state court action, as was done here. See,
e.g., Cap Gemini Ernst & Young U.S. LLC v. Arentowicz, No. 04 Civ. 0299 (DAB), 2004 U.S.
Dist. LEXIS 11337, at *7 (S.D.N.Y. June 22, 2004) (petition to compel arbitration of NJLAD
claims granted even though respondent had previously filed a state court action under NJLAD).
See also, Great W. Mortg. Corp. v. Peacock, 110 F.3d 222, 234 (3d Cir. 1997) (affirming District
Court’s order granting appellee’s petition to compel arbitration of appellant’s NJLAD claims
where appellant had previously filed a state court action under NJLAD).
The Second Circuit has declared that in deciding whether to compel arbitration, a District
Court must determine only: (1) whether there is an agreement to arbitrate; and (2) the scope of
the agreement to arbitrate. Cap Gemini Ernst & Young, U.S., LLC v. Nackel, 346 F.3d 360, 365
(2d Cir. 2003). See also Wright v. SFX Entm’t, Inc., No. 00 Civ 5354 (SAS), 2001 WL 103433,
at *2 (S.D.N.Y. Feb. 7, 2001) (citing Genesco, Inc. v. T.Kakiuchi & Co., 815 F.2d 840, 844 (2d
Cir. 1987)).
A. There is an Agreement to Arbitrate Between Swain and Hermés
In determining whether parties have agreed to arbitrate, “courts apply generally accepted
principles of contract law. … [P]ursuant to New York law, a person who signs a contract is
presumed to know its contents and to assent to them.” Arakawa v. Japan Network Grp., 56 F.
Supp. 2d 349, 352 (S.D.N.Y. 1999) (citation omitted).4
The arbitration agreement signed by Swain and Hermés is a stand-alone document
entitled “Dispute Resolution Procedure,” that concerns the resolution of disputes between an
Hermés employee and Hermés, which is defined to include its “officers, executives and
4 Pursuant to the terms of the DRP, New York law governs the parties’ dispute and the parties’ agreement. (Ex. B, p.
5.) See Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir. 2000).
Case 1:16-cv-06255-CM Document 5 Filed 08/05/16 Page 12 of 17
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employees.” 5 (Ex. B, p. 5.) As expressly stated in the text of the DRP Agreement, Swain
acknowledged that by signing the Agreement he was “agree[ing] (i) to mediate; and (ii) to
arbitrate, with arbitration being the sole, exclusive, and final forum for any remedy.” (Id., p. 2.)
(emphasis supplied). In signing the agreement, Swain further acknowledged that he was,
“waiving any right [he] may have to a court or jury trial.” Id. Further, in bold text, directly
above his signature line, Swain attested that he “read this agreement, underst[oo]d it and [was]
voluntarily entering into it.” (Id., p. 4.) There is simply no question that the parties voluntarily
entered into an agreement that requires Swain to arbitrate his claims against Hermés and
Bautista, as a Hermés employee.
B. The Scope of the Agreement to Arbitrate Includes the Claims Identified in the
State Court Complaint
With regard to the scope of an arbitration clause, the Courts in this circuit have stated,
Federal policy strongly favors arbitration as an alternative dispute
resolution process. We are instructed that any doubts concerning
the scope of the arbitrable issues should be resolved in favor of
arbitration. Accordingly, federal policy requires us to construe
arbitration clauses as broadly as possible. We will compel
arbitration unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers
the asserted dispute.
Collins & Aikman Prods. Co. v. Bldg. Sys., 58 F. 3d 16, 19 (2d Cir. 1995) (internal citations
omitted). The Second Circuit has further instructed that a “broadly-worded arbitration clause …
creates a strong presumption in favor of arbitrability that applies with even greater force.”
Aerotel, 99 F. Supp. 2d at 372. The broadly-worded arbitration provision in the DRP
5 Swain’s allegations against Lorenzo Bautista, the individually named manager and a current Hermés employee,
also fall within the scope of the DRP Agreement and should similarly be compelled to arbitration. As stated in the
DRP Agreement, “the disputes covered … include all legal and equitable claims, demands, and controversies …
between you and [Hermés], its corporate parent… and its … employees.” (Ex. B, p.5) Accordingly, Bautista, as a
Hermés employee, is a third party beneficiary of the DRP Agreement and Swain’s claims against him must be
brought in arbitration. See Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009) (arbitration agreement held
enforceable with respect to individuals not named name in agreement, who did not sign agreement, but who were
incorporated by reference as third party beneficiaries).
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Agreement, by its terms, covers “all legal and equitable claims, demands, and controversies, of
whatever nature or kind, whether in contract, tort, under statute or regulation, or some other
law….” (Ex. B, p. 5.) The DRP Agreement then specifically states that claims of
“discrimination, harassment, or retaliation in employment… including, but not limited to …
sexual orientation… under any federal, state and/or governmental law, statute, regulation, and/or
ordinance” as well as claims concerning “compensation,” are encompassed by the Agreement.
(Ex. B, p. 5.) The DRP Agreement thus unquestionably covers Swain’s purported
discrimination, hostile environment, retaliation and contract-based claims, and indeed expressly
identifies these claims as falling within its scope. For these reasons, arbitration must be
compelled.
IV. THIS COURT SHOULD ENJOIN THE PENDING STATE COURT ACTION
The FAA provides for the stay of an action subject to arbitration in addition to an order to
arbitrate pursuant to the agreement. See 9 U.S.C. § 3. Section 3 of the FAA states:
If any suit or proceeding be brought in any of the courts of the
United States upon any issue referable to arbitration under an
agreement in writing for such arbitration, the court in which such
suit is pending, upon being satisfied that the issue involved in such
suit or proceeding is referable to arbitration under such an
agreement, shall on application of one of the parties stay the trial
of the action until such arbitration has been had in accordance with
the terms of the agreement, providing the applicant for the stay is
not in default in proceeding with such arbitration.
Id. Thus, section 3 of the FAA “requires courts to stay litigation of arbitral claims pending
arbitration of those claims[.]” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011).
“The effect of that stay is twofold: it relieves the party entitled to arbitrate of the burden of
continuing to litigate the issue while the arbitration process is on-going, and it entitles that party
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to proceed immediately to arbitration without the delay[.]” Lloyd v. Hovensa, 369 F.3d 263, 270
(3d Cir. 2004).
This Court has authority to enjoin the concurrent New Jersey state court action pursuant
to the Anti-Injunction Act, which provides that a federal court may enjoin a state court action in
three limited circumstances, (1) where “expressly authorized by Act of Congress”; (2) “where
necessary in aid of its jurisdiction”; or (3) “to protect or effectuate its judgments.” 28 U.S.C. §
2283. The latter two exceptions to the Anti-Injunction Act have repeatedly been relied upon by
federal courts to enjoin concurrent state court actions in conjunction with an order compelling
arbitration. See Pervel Indus., Inc. v. TM Wallcovering, Inc., 675 F. Supp. 867, 870 (S.D.N.Y.
1987) (“case law is clear that [‘necessary in aid of jurisdiction’] provision provides authority for
a federal district court to stay a parallel state proceeding pending arbitration”), aff’d, 871 F.2d 7
(2d Cir. 1989); Reliance Nat’l Ins. Co. v. Seismic Risk Ins. Servs., Inc., 962 F. Supp. 385, 391
(S.D.N.Y. 1997) (court granted order to compel arbitration and enjoined California state court
action within statutory exception to Anti-Injunction Act); In re Burger Chef Sys. Inc. v. Baldwin
Inc., 365 F. Supp. 1229, 1233-34 (S.D.N.Y. 1973) (Michigan state court action stayed under
Anti-Injunction Act and parties compelled to arbitrate); In re Necchi Sewing Mach. Sales Corp.
v. Carl, 260 F. Supp. 665, 669 (S.D.N.Y. 1966) (court enjoined Oklahoma state court action to
“protect” and “effectuate” its order to compel arbitration in accordance with Anti-Injunction
Act).
Setting aside the Court’s authority to enjoin the New Jersey state court action pursuant to
28 U.S.C. § 2283, Hermés’ petition should further be granted because: (1) Swain unequivocally
consented to Hermés’ application for injunctive relief to enforce the DRP when he signed the
DRP Agreement and, therefore, cannot now oppose Hermés’ application (Ex. B, p. 3); and (2)
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even without Swain’s consent, this Court has authority under more general principles of equity to
enjoin Swain from pursuing his state court action.
A party seeking injunctive relief must establish “(a) irreparable harm and (b) either (1)
likelihood of success on the merits or (2) sufficiently serious questions going to the merits to
make them a fair ground for litigation and a balance of hardships tipping decidedly toward the
party requesting the preliminary relief.” Citigroup Global Mkts., Inc. v. VCG Special
Opportunities Master Fund, Ltd., 598 F.3d 30, 35 (2d Cir. 2010) (citation omitted). Hermés
easily establishes its entitlement to an injunction.
“The showing of irreparable harm is perhaps the single most important prerequisite for
the issuance of a preliminary injunction.” Kamerling v. Massanari, 295 F.3d 206, 214 (2d Cir.
2002). Hermés will undoubtedly suffer irreparable harm if it is deprived of its federal and state
contractual right to arbitrate its dispute with Swain, as it will be forced to defend against a state
court action while simultaneously arbitrating before the AAA, subjecting itself to potentially
conflicting results. See Reliance Nat’l Ins. Co., 962 F. Supp. at 391 (losing a right to arbitration
constitutes irreparable harm); Int'l Fashion Prods., B.V. v. Calvin Klein, Inc., No. 95 Civ. 0982
(JFK), 1995 WL 92321, at *2 (S.D.N.Y. March 7, 1995) (same).
The “likelihood of success” element requires only that petitioner convince the court that
it is more likely than not – that is greater than a fifty percent chance – that it will succeed on its
claims. Greenlight Capital, L.P. v. Apple, Inc., No. 13 Civ. 900 (RJS), 2013 WL 646547, at *4
(S.D.N.Y. Feb. 22, 2013). Given that there is no dispute that the parties entered into a valid and
binding arbitration agreement which explicitly covers Swain’s claims under the NJLAD and
New Jersey common law, Hermés easily satisfies this burden. See Paramedics Electromedicina
Comercial LTDA v. GE Med. Sys. Info. Techs., Inc., No. 02 Civ. 9369 (DFE), 2003 WL
Case 1:16-cv-06255-CM Document 5 Filed 08/05/16 Page 16 of 17
12
23641529, *11-13 (S.D.N.Y. June 4, 2003) (court enforced arbitration agreement and enjoined
simultaneous court action in Brazil under preliminary injunction analysis).
Under either the Anti-Injunction Act or the court’s inherent equitable powers, an order to
enjoin the New Jersey state court action is appropriate because Swain must be held to the
agreement he executed which requires him to arbitrate his employment discrimination and
contract claims before the AAA. The injunction will relieve Hermés of the burden of having to
address Swain’s state court action during the pending arbitration.
CONCLUSION
For the reasons set forth above, Hermés respectfully requests that the Court: (i) grant its
Petition; (ii) compel Swain to arbitrate his claims against Hermés and Bautista; and (iii) enjoin
the New Jersey Superior Court action, Docket No.: ESX-L-4996-16, pending resolution of the
arbitration.
Dated: Newark, New Jersey
August 5, 2016
PROSKAUER ROSE LLP
Attorneys for Plaintiff
By: /s/ Lawrence R. Sandak
Lawrence R. Sandak
Edna D. Guerrasio
One Newark Center
Newark, New Jersey 07102-5211
(973) 274-3200
lsandak@proskauer.com
eguerrasio@proskauer.com
Case 1:16-cv-06255-CM Document 5 Filed 08/05/16 Page 17 of 17